ROXANA — Madison County State’s Attorney Tom Gibbons announced a settlement in the tax objection case involving Wood River Refinery and the Roxana School District on Tuesday, calling into question the district’s actions in the process.
A Madison County Circuit Court judge signed an order that will require the school district to repay $8.6 million in property taxes collected from the refinery in the 2011 tax year, approximately 70 percent of the $12.3 million the refinery requested in its objection. In total, the district collected $14.455 million from the refinery that year.
Property taxes are the largest source of income for school districts. In setting tax levies, districts are required to assess for need and set the levies accordingly.
In 2010, the district received $3.535 million in property taxes from WRB Refining, which owns and operates Wood River Refinery. The same year, a long-term funding agreement between the refinery and the school district ended.
After a $3.8 billion expansion that saw the refinery’s assessed value rise from $93.4 million in 2010 to $402 million in 2011, the district collected nearly $11 million more in the following tax year.
Gibbons said by his estimation, the district’s needs didn’t match up with the amount for which it levied.
“Unfortunately, the District had attempted to grossly inflate the property tax bill of the refinery to an unsustainable level — without the ability to lawfully justify the need for the increase,” Gibbons wrote in a press release. “While each taxpayer must pay their fair share, it is not a proper exercise of taxing authority to single out one taxpayer as a means to over-inflate spending.”
Gibbons said he settled with the refinery with the belief that the school district would be forced to repay most to all of the requested $12.3 million if the case were to be tried in court. Gibbons said the approximately $6 million the district will get to keep from that tax year, a nearly 70 percent increase from the 2010 tax year, is “still an extraordinary bounty for a school district — especially in the difficult economic times everyone has faced over the last several years.”
Roxana Superintendent Debra Kreutztrager disputed Gibbons’ claims of unlawful taxing, citing the district’s tax rate as being the lowest in Madison County. Kreutztrager also said the release contained “numerous factual errors and erroneous legal conclusions which presumably led Mr. Gibbons to settle this tax objection against the wishes of each and every taxing body involved in the litigation.
“While the Roxana School District increased its property tax levy for 2011, it did so in full compliance with state law, just as it has done every year,” Kreutztrager said. “No court and no authority knowledgeable in Illinois public school finance has ever told the Roxana School District that it has adopted its tax levies unlawfully. Even though the Roxana School District’s tax levy increased, its tax rate decreased from 4.3754 percent in 2010 to 3.8922 percent in 2011 to the benefit of every taxpayer in the district, including every homeowner and every business owner, including WRB.”
Along with the 2011 tax, WRB has also filed an objection to the $15.9 million tax bill from the district in 2012. Kreutztrager recently told The Telegraph that the $8.6 million refund will exhaust the district’s reserves, and a similar refund from the 2012 tax year would force the district to cut nearly one-third of its education budget for the 2015-16 school year. Kreutztrager estimated that would include cutting 30 to 40 teachers, among other reductions.
Gibbons said any of the cuts outlined by Kreutztrager would be “due to poor management by RSD’s administration.” In that same vein, Gibbons also wrote in his release that there were “serious concerns about the financial practices” of the district, including raises given to Kreutztrager and business manager Cris Hagen in recent years. In the years since the refinery’s expansion, Kreutztrager’s salary has risen from $125,898 in 2010 to $150,756 in 2013; Hagen’s has gone from $115,120 to $135,534 in that same span.
Gibbons also touched on the $9 million in working cash fund bonds that the district attempted to issue earlier this year. The funds, which were earmarked to be used for capital projects including the construction of a new gymnasium and installation of air conditioning at the junior high/high school, are also held up due to a lawsuit filed by WRB.
Given the current financial climate for school districts, Gibbons said such spending is “excessive.”
“Even in the best of times, these big raises every year would be considered excessive,” Gibbons wrote. “The settlement we have reached goes a long way to reigning in the excessive spending of this taxing district, and sends a clear message that extraordinary increases in property taxes put upon taxpayers will not be tolerated.”
Hope still exists that an agreement could be reached, though. Despite not being able to come to terms at a court-ordered settlement conference last month — a conference at which Kreutztrager said the district had no input — both sides have remained open to a deal. An official with the Madison County State’s Attorney’s Office said the signed order could still be vacated should a long-term agreement be reached.
Nathan Grimm may be reached at 618-208-6451 or on Twitter @GrimmTelegraph.